Bharat Sanchar Nigam Limited

The state-run telecom operator, BSNL claims that it has outperformed private sector rivals such as Bharti Airtel, Vodafone India, and Idea Cellular in net subscriber additions, when over 11.3 million subscribers joined BSNL’s network from rivals in 2017-18.

BSNL plans to invest Rs 4300 crore toward infrastructure expansion and network modernization activities in FY19. New investment will be for putting up 4G hotspots, expansion of 3G services, replacement of outdated network, enhancement of broadband capacity, and making the core network robust with further extension in far-flung areas. It is also looking to add 12,000 mobile towers for 3G expansion.

The government is looking at a plan to allocate 4G spectrum on a commercial basis to the carrier. The telco has proposed to pay 50 percent upfront through the equity route for acquiring a 5 MHz block spectrum in the 2100 MHz band, and the rest in 16 annual installments through the revenue it generates after the 4G service rollout. It is planning to launch 4G on the 2100 MHz band in all licensed service areas (LSAs) except Rajasthan where we have airwaves in the 800 MHz range. The telco has already launched 4G technology-based data services in Kerala and Karnataka on a pilot basis, and can concurrently run 3G and 4G services on the 2100 MHz frequency range in order to optimally utilize the band.

The telco has also formed a fully-owned subsidiary BSNL Tower Corp. Ltd. (BTCL), as a separate entity for mobile infrastructure deployment, and BTCL would start operations after the conclusion of the ongoing regulatory process.

The company also aims a Rs 6.5 billion revenue in FY19 through partnerships with virtual network operators (VNOs). The company has tied-up with VNOs Plintron and Aerovoyce, becoming the first telco in the country to launch such services. The Telecom Commission, had recently removed double taxation for VNOs. The issue of double taxation has been the major reason for muted growth of VNO services in India. There are around 67 firms, which had taken licenses for VNOs but most of them are yet to launch services due to cascading taxes. However, now the VNOs only have to pay adjusted gross revenue (AGR) on the value added, a move which may kickstart the VNO framework.

Financial Highlights

Telecom Regulatory Authority of India (TRAI) data puts BSNL’s wireless subscriber base at 111.68 million in March 2018, up from 107.92 million in December 2017 and 101 million in March 2017.

BSNL posted Rs 4785 crore as provisional and unaudited net loss in 2017-18, compared with Rs 4786 crore net loss in 2016-17. Revenue for the year fell to Rs 27,818 crore from Rs 31,533 crore a year earlier.

The company’s income stood at Rs 324.11 billion (FY16), Rs 315.33 billion (FY17), and Rs 278.18 billion in FY18 (provisional and unaudited). The numbers are gloomy for BSNL, which spends around half of its earnings on salaries to employees. Compare that to Airtel, whose employee benefit expenses only amounted to a little under 5 percent of revenue in 1QFY19.

Since BSNL has incurred losses consecutively for the last 3 years, it has been declared as Incipient Sick as per the guidelines of the Department of Public Enterprises (DPE). Accordingly, action has been initiated by the Department of Telecommunications (DoT) for preparation of a revival/restructuring plan of BSNL. Details are:

Implementation of providing mobile connectivity in 2199 identified locations in left wing extremism (LWE) affected areas at an estimated cost of Rs 3567.58 crore

Refund of surrendered BWA (broadband wireless access) spectrum in six service areas held by BSNL. Under this head, Rs 6724.51 crore was refunded to BSNL through budgetary resources

  • Implementation of the Comprehensive Telecom Development Plan for Andaman and Nicobar Islands and Lakshadweep Islands through augmentation of satellite connectivity/bandwidth at an estimated cost of Rs 120.49 crore
  • Refund of Rs 169.16 crore to BSNL on account of surrender of CDMA (code division multiple access) spectrum
  • Optical fiber cable based Network for Defense Services (NFS Project) has been given to BSNL on nomination basis at the cost of Rs 24,664 crore
  • For execution of the BharatNet project, the government has provided Rs 5744 crore in phase-I and has earmarked Rs 6500 crore in phase-II to BSNL
  • Comprehensive Telecom Development Plan for the North-Eastern Region for provision of mobile services in uncovered villages in Arunachal Pradesh and two districts of Assam at an estimated project cost of Rs 1975.38 crore and implementation of Transmission-Media Plan for the North Eastern Region at an estimated cost of Rs 295.97 crore
  • Submarine Optical Fiber Cable Project at the cost of Rs 1900 crore has been assigned to BSNL on nomination basis for providing connectivity to the Andaman and Nicobar Islands
  • Work of setting up of 25,000 wi-fi Hotspots at Rural Telephone Exchanges at the cost of Rs 940 crore has been given to BSNL
  • Work of setting up of a satellite gateway at the cost of Rs 68 crore has been given to BSNL on a nomination basis
  • Notional loan of Rs 1411 crore to BSNL which was due to be paid to the government was waived-off.

“Net percentage subscriber additions of BSNL are the highest at 11.5 percent in 2017-18. Industry statistics reveal that Bharti Airtel grew at 9.5 percent, Vodafone 3.8 percent, Idea 3.2 percent during the same period.”

Anupam Shrivastava

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